RE:RE:RE:RE:RE:RE:RE:RE:High Purity premium "So my interpretation is that Largo has been received premium on the sales of High Purity based on some contractual agreement with Glencore but not at the US$3-$4 market based premium that they hope to achieve in 2019 and beyond."
I completely agree. Could the contracts he's referring to not actually involve Largo, rather the end users Glencore has contracts with? I get the feeling Glencore had long term contracts in place well before Largo began high purity production.
That would explain why it's "out of Largo's control" and Largo gets 50% of "whatever premium Glencore secures." I think, from MS's comments, it's safe to assume that Largo will enjoy about 50% higher, high purity prices along with roughly 50% of sales dedicated to high purity products in 2019.
Sounds like there's been a cap on high purity prices that'll end a month after rebar standards kick in.
I also agree with your comments on debt reduction. After replaying the call, it's clear they're targeting the remaining $20.7 million with Banco Pine. There's no penalty for early repayment.
Good Luck To All!$!$
@ the 66:20 minute mark, John Hardy asks about the high purity products and prices. Mark Smith responds: "We do expect the total premium for our product to increase significantly in 2019." "But remember, and this is all in our press releases announcing the amendments to the contract with Glencore, but until May of 2020, we get 1/2 of whatever premium Glencore secures in the market with our material." @ the 37 minute mark "We do anticipate seeing as a company much higher premiums coming back to the company on these products in 2019 vs 2018 because of some contractual situations that really are out of our control. But in 2019, everything starts to head into a market based premium approach and we'll see our premiums on these products go up to what they should be." Matt: "I think the premiums this year were $3 to $4 above spot price so what potentially, how much could it increase to next year?" MS: "That would be about what it would go to Matt, we're not realizing that price premium yet because of some contractual issues involving our off-take partner. But we do expect all of those to go by the wayside at the end of 2018, those contracts expire and then we get into real life again where the market based pricing comes into play and Largo will be the beneficiary of that." Page 5 of the Jefferies Presentation... In it's recent amendment to the offtake agreement with Glencore, Largo is now able to participate on a 50:50 basis in the economic upside from any such premiums received on the sale of high-purity vanadium pentoxide flakes and high-purity vanadium pentoxide powder products.